The one that I’m a little less clear on is warranty. So you’ve talked about how maybe warranty has been going through a tougher period, but there is an opportunity for it to maybe revert to the mean, which I think is partly underway with the improvement in profits this quarter versus last quarter. You mentioned on the call like a $600,000 reduction. And so, if I annualize that, I get to between $2 million and 3 million of EBITDA above where you currently are, maybe in a more normal environment. So I’m not talking about a peak environment, but I’m also not talking about a poor environment. Is that the right way to think about it? Or how do you think about what kind of a normalized earnings power would be for the warranty business compared to where you have it over the last 12 months?
JT Fitzgerald: Yes, that’s a great question. A lot of ways to sort of attack that. First and foremost, I would say, TTM is our sort of best predictor of the future in a more normal environment. Obviously, warranty isn’t there right now, Adam. And so, yes, they have been very focused on cost rationalization and maintaining sort of very lean operating environment in what is a challenging both sales and claims environment. And so, the way I think about it is that, the cost reductions have essentially offset the reduction in revenue and that claims are in the quarter were sort of $600,000 higher than prior quarter. And as we move forward, we’re going through a pretty comprehensive pricing exercise, both moving vehicles, mileage bands into different rate classes and things, and also taking price kind of across the entire book.
And so, if those — just kind of to play on your question here, as those price increases work their way through the book, and we’re talking sort of mid- to high single-digit price increases, that would offset the claim severity. And if the operating expense improvements are sustained, then you get back to that sort of $2 million in improved profitability, right? That isn’t guidance, but that’s just me kind of working through the math the way I think about it.
Adam Patinkin: Got it. That’s super helpful. I mean, that’s — essentially that’s what I’m trying to get at is to say, okay, in a more normal environment, and I’m confident the car market will head back towards that. Obviously, you can see the declines in car prices that are coming through with I think more to come. But in a more normal environment that I’m confident the business will do maybe what it’s done in the past. And that’s really helpful to know that maybe normalized warranty means that adjusted EBITDA number might be more like $22 million or $23 million or whatever it whatever it would end up being. Let’s see, my next question is on the VA Lafayette. Can you give any update on that sales process?
Kent Hansen: Yes, Adam, this is Kent. So we continue to have it being marketed by a national broker. We’ve had a number of interests in that. And we just continue to — the commercial real estate market has been a little bit challenging this year, but we continue to market it towards targeted people or companies that we think would be interested in that particular profile. It does have some debt on it that some people find attractive. Some buyers need some depreciation recapture before the end of the year. So it’s still a very active market right now.
Adam Patinkin: Got it. Great. That’s helpful. And then my next question is just on your searchers. You’ve got 2 searchers going right now. And I know your goal is to bring on a couple more searchers. Can you maybe speak to both of those? How’s it going with the current searchers? And how are they progressing in their searches? And then also, can you speak to your confidence level about attracting high-quality candidates to join as your next 2 searchers?
JT Fitzgerald: Yes, sure. Happy to talk about it. So Peter Hearne joined us in early May and then Miles just joined us at the end of the summer, mid to late August. And now as we’ve launched both Drew and Peter Dausman and soon to launch Davide, we’ve been actively recruiting and fielding inbound interest through concentric circles of networks of our current CEOs and OIRs talk to dozens and dozens, 60-plus candidates, really high-quality group of folks that we’ve been talking to. We’re in pretty advanced stages with a handful of them. And the goal would always be to have 4 to 5 people actively looking for acquisitions in support of that 2 to 3 acquisitions a year. And so, yes, we’re making great progress. Again, we want to maintain our discipline and really target folks that have that set of attributes that we think will make them both effective searchers, but more importantly, great CEOs and small businesses.
And so, that work is ongoing. And with respect to Miles and both at Peter, early days, we’ve built a really nice set of processes around proprietary search, as well as intermediated search. They’ve got a handful of industries that they’re very interested in and they’re running that playbook. But I would always go back to sort of average time to close a transaction is probably 17 or 18 months. We’ve seen that here at Kingsway, right? Some searchers close very quickly, like Davide. Peter Dausman took him over 2 years to finally close a transaction. And so, we’re going to support them, focus on what we say is, we derive our margin of safety from business quality. And so, really making sure that we maintain our discipline around the types of acquisitions we’re pursuing.
And so, they’re doing all the right things and we’re very optimistic about their prospects, but we also want to maintain discipline.
